FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period to
Commission file number 0-16798
SECURED INVESTMENT RESOURCES FUND, L.P. II
(Exact name of registrant as specified in its charter)
Delaware 36-3451000
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5453 W. 61st Place, Mission, Kansas 66205
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number,
including area code) (913) 384-5700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests ("Units")
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter periods that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited):
Balance Sheets -- March 31, 1995 and
December 31, 1994 3-4
Statements of Operations -- Three
Months Ended March 31, 1995 and 1994 5
Statements of Partnership Capital --
Three Months Ended March 31, 1995
and the Years Ended December 31, 1994,
and 1993 6
Statements of Cash Flows -- Three Months
Ended March 31, 1995 and 1994 7-8
Notes to Financial Statements 9-11
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 12-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P. II
BALANCE SHEETS
March 31,
1995 December 31,
Unaudited) 1994
ASSETS
INVESTMENT PROPERTIES--Note
Land and buildings $ 36,187,745 $ 36,167,642
Furniture, fixtures and equipment 1,537,013 1,488,893
__________ __________
37,724,758 37,656,535
Less accumulated depreciation
and allowance for losses 9,823,539 9,529,532
__________ __________
27,901,219 28,127,003
RESTRICTED DEPOSITS
Bond cash reserves 1,510,000 1,510,000
Bond principal reduction reserves 428,799 424,464
__________ __________
1,938,799 1,934,464
OTHER ASSETS
Cash 470,539 284,224
Rents and other receivables,
less allowance of $47,300
in 1995 and $47,282 in 1994 72,691 21,472
Due from related parties--Note B 176,158 173,996
Prepaid expenses 154,980 130,672
Debt issuance costs, net of
accumulated amortization of
$98,619 in 1995 and $88,602
in 1994 119,759 129,775
Commercial commissions, deposits
and other 169,971 161,674
__________ __________
1,164,098 901,813
__________ __________
$ 31,004,116 $ 30,963,280
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
BALANCE SHEETS--CONT'D.
March 31,
1995 December 31,
(Unaudited) 1994
LIABILITIES AND PARTNERSHIP CAPITAL
Mortgage debt--Note D $ 28,527,286 $ 28,555,529
Deferred interest--Note D 1,108,465 1,108,465
Accrued interest 470,171 368,403
Accounts payable and accrued
expenses 525,602 391,988
Unearned revenue 14,268 14,012
Tenant security deposits 129,738 129,306
TOTAL LIABILITIES 30,775,530 30,567,703
PARTNERSHIP CAPITAL
General Partners
Capital contribution 1,000 1,000
Partnership deficit (186,743) (185,073)
__________ __________
(185,743) (184,073)
Limited Partners
Capital contributions 18,901,831 18,901,831
Partnership deficit (18,487,502) (18,322,181)
414,329 579,650
TOTAL PARTNERSHIP CAPITAL 228,586 395,577
__________ __________
$ 31,004,116 $ 30,963,280
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
March 31,
1995 1994
REVENUES
Rents $1,432,728 $1,376,157
Maintenance
escalations
and other 22,448 24,068
__________ __________
1,455,176 1,400,225
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 571,984 543,511
General and
administrative
expenses 29,594 31,519
Professional services 17,174 44,759
Management fees and
reimbursed direct
expenses 66,921 65,101
__________ _________
685,673 684,890
NET OPERATING INCOME 769,503 715,335
NON-OPERATING EXPENSES
Interest 594,670 544,111
Depreciation and
amortization 341,824 350,366
__________ _________
936,494 894,477
PARTNERSHIP INCOME
(LOSS) $ (166,991) $ (179,142)
Allocation of loss:
General Partners (1,670) (1,791)
Limited Partners (165,321) (177,351)
__________ _________
$ (166,991) $ (179,142)
Partnership loss per
limited partnership
unit $ (3.08) $ (3.31)
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited)
Three Months Ended March 31, 1995 (Unaudited) and
the Years Ended December 31, 1994 and 1993
General Limited
Partners Partners Total
Balances at January 1, 1993 $ (186,964) $ 293,378 $ 106,414
Partnership income 11,783 1,166,558 1,178,341
Balances at December 31, 1993 (175,181) 1,459,936 1,284,755
Partnership loss (8,892) (880,286) (889,178)
Balances at December 31, 1994 (184,073) 579,650 395,577
Partnership loss (1,670) (165,321) (166,991)
Balances at March 31, 1995 $ (185,743) $ 414,329 $ 228,586
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31,
1995 1994
OPERATING ACTIVITIES
Partnership income (loss) $ (166,991) $ (179,142)
Adjustments to reconcile
partnership loss to net cash
provided by (used in) operating
activities:
Depreciation and amortization 304,024 350,366
Amortization of bond discount 37,800
Provision for losses on rents
and other receivables 7,500 (5,340)
Changes in assets and liabilities:
Rents and other receivables (58,719) 17,568
Prepaid expenses (24,308) (2,687)
Due from related parties (2,162) 15,025
Debt issuance costs --- (19,867)
Commercial commissions, deposits
and other (8,297) 10,181
Accounts payable
and accrued expenses 133,614 82,655
Accrued interest 101,768 (67,863)
Unearned revenue 256 (3,509)
Tenant security deposits 432 (4,899)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 324,917 192,488
INVESTING ACTIVITIES
Purchases of and improvements
to investment properties (68,223) (17,180)
Purchase of restricted bond
cash reserves (4,335) (3,608)
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (72,558) (20,788)
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D.
Three Months Ended
March 31,
1995 1994
FINANCING ACTIVITIES
Deferral of long-term
interest payable $ --- $ 37,508
Principal payments on
long-term debt (66,044) (89,716)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (66,044) (52,208)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 186,315 119,492
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD 284,224 208,515
CASH AND CASH EQUIVALENTS
END OF PERIOD $ 470,539 $ 328,007
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
NOTES TO FINANCIAL STATEMENTS (Unaudited)
March 31, 1995
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1995 are
not necessarily indicative of the results that may be expected for the
year ended December 31, 1995. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's
annual report on Form 10-K for the year ended December 31, 1994.
NOTE B--DUE FROM RELATED PARTY
Affiliates of the General Partners are entitled to receive payments from
the Partnership for management and other services. Specs, Inc. (a
corporation in which the General Partner has a minority interest)
receives property management fees for providing property management
services and direct cost reimbursements based upon time allocated to
performing certain Partnership functions. Amounts paid or accrued by
the Partnership to affiliates of the General Partners are as follows:
Three Months Ended
March 31,
1995 1994
Property Management Fees $ 66,921 $ 65,101
Amounts due from related parties consist of the following:
March 31, December 31,
1995 1994
Secured Investment Resources
II, Inc. $ 124,422 $ 124,422
The Hoyt Group, Ltd. 51,736 49,574
__________ __________
$ 176,158 $ 173,996
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D.
NOTE B--RELATED PARTY TRANSACTIONS--CONT'D.
The net amount due from related parties represents excess syndication
costs, management fees payable and other advances. The terms of
repayment are discretionary and have not been formalized at this time.
The General Partners are entitled to receive a Partnership Management
Fee equal to 5% of Cash Flow From Operations (as defined) for managing
the normal operations of the Partnership. There was no management fee
due as of March 31, 1995 or December 31, 1994.
NOTE C--CASH DISTRIBUTIONS
No cash distributions have been made since April 1990. Future
distributions will only be made from excess cash flow not needed for
working capital reserves.
NOTE D--MORTGAGE DEBT
Mortgage debt consists of the following:
March 31, December 31,
1995 1994
Collateralized by Investment
Property:
First Mortgages:
Sunwood Village Apartments $ 8,233,326 $ 8,264,056
Bayberry Crossing Shopping Ctr. 835,292 835,292
Thomasbrook Apartments 4,991,896 4,995,784
Oak Terrace Active Retirement
Center and Healthcare Center 12,800,000 12,800,000
Less bond discount (2,466,442) (2,504,242)
Forest Park Shopping Ctr. 1,361,780 1,383,627
Second Mortgages:
Bayberry Crossing Shopping Ctr. 1,921,434 1,931,012
Thomasbrook Apartments 850,000 850,000
__________ __________
$28,527,286 $28,555,529
Related to the Sunwood Village Apartments purchase money note is a
credit enhancement fee which is due at maturity. As of March 31, 1995
and December 31, 1994, $371,095 of credit enhancement fees have been
accrued and are reflected in long-term accrued interest.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D.
NOTE D--MORTGAGE DEBT--CONT'D.
The Partnership has the option to currently pay or defer payment of
interest due on the hedged portion ($8,400,000) of the Oak Terrace
Active Retirement Center and Healthcare Center bond financing. As of
March 31, 1995 and December 31, 1994, $737,370 of deferred interest has
been accrued and is reflected in long-term accrued interest.
Cash paid for interest totaled $490,702 and $568,135 during the first
three months of 1995 and 1994, respectively.
(The remainder of this page intentionally left blank.)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Revenues for the first quarter of 1995 increased by $55,000 (3.9%)
compared to the same quarter of last year. The revenue increased
approximately $40,000 in multifamily housing, $17,000 at Oak Terrace
Active Retirement Center and declined by $2,000 in the commercial
properties. The stronger apartment markets allowed the Partnership to
continue increasing rental rates, discontinue rent concessions and
maintain high occupancy levels. The commercial property remained strong
at Forest Park Center in St Louis, however the rental income at Bayberry
Center declined slightly, due to a weaker tenant mix. The Partnership
has also increased the rental rates at Oak Terrace, resulting in higher
revenue, but also higher vacancy rates. The Partnership feels that the
strong apartment market will continue through 1995 into 1996.
Total Operating and Administrative expenses remained relatively
unchanged when comparing the first quarter of 1995 with the same quarter
of 1994. Slightly higher property operating expenses due to higher
resident turnover, was offset by lower professional services.
Interest expense for the first quarter increased $51,000 (9.3%) over the
1994 first quarter expense. This is due primarily to higher interest
rates, and increased bond collateral fees.
The Partnership anticipates that operating results for the first quarter
will be representative of the results for the remainder of the year.
Liquidity and Capital Reserves
During the first quarter $325,000 of cash was provided by operating
activities, $73,000 was used for investing activities and $66,000 was
used to reduce long term debt.
Although the cash position has improved during the quarter, the
Partnership is past due on the Thomasbrook Apartment first and second
mortgages and real estate taxes. The General Partners believe that
working capital will be available during the remainder of the year to
reduce this past due balance and fund known, on-going operating and
capital requirements. The General Partners also anticipate that 1995
cash flow from operations will continue to improve because of strong
occupancy, continued rental rate increases, and stablized expenses.
It is the General Partners' intent to evaluate the Partnership's
portfolio to determine if it is prudent to offer one or more properties
for sale or possible restructure the related financing packages. Any
unleveraged portion of the net sales proceeds or favorable refinancing
terms could generate additional working capital.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.-- Cont'd.
Liquidity & Capital Reserves -- Cont'd.
At the present time, contract negotiations are continuing with a
potential buyer for Sunwood Village Apartments.
The General Partners have determined it prudent to discontinue cash
distributions until such time that adequate working capital and capital
improvement reserves are in place.
(The remainder of this page intentionally left blank.)
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
Inapplicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Inapplicable.
Item 5. OTHER INFORMATION
Inapplicable.
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during
the quarter ended March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SECURED INVESTMENT RESOURCES FUND, L.P. II
A Delaware Limited Partnership
(Registrant)
By:
James R. Hoyt
as Individual General Partner
Date: April 20, 1995
By: Secured Investment Resources II, Inc.
as Corporate General Partner
By:
James R. Hoyt, President
Date: April 20, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Unaudited.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 470,539
<SECURITIES> 1,938,799
<RECEIVABLES> 119,991
<ALLOWANCES> 47,300
<INVENTORY> 0
<CURRENT-ASSETS> 1,164,098
<PP&E> 37,724,758
<DEPRECIATION> 9,823,539
<TOTAL-ASSETS> 31,004,116
<CURRENT-LIABILITIES> 2,248,244
<BONDS> 28,527,286
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 31,004,116
<SALES> 0
<TOTAL-REVENUES> 1,455,176
<CGS> 0
<TOTAL-COSTS> 685,673
<OTHER-EXPENSES> 341,824
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 594,670
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (166,991)
<EPS-PRIMARY> (3.08)
<EPS-DILUTED> 0
</TABLE>
